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Question;Adria Lopez created Success Systems on October 1, 2013. The company has been successful, and its list of customers has grown. To accommodate the growth, the accounting system is modified to set up separate accounts for each customer. The following chart of accounts includes the account number used for each account and any balance as of December 31, 2013. Adria Lopez decided to add a fourth digit with a decimal point to the 106 account number that had been used for the single Accounts Receivable account. This change allows the company to continue using the existing chart of accounts.No. Account Title Debit Credit 101 Cash $ 48,572 106.1 Alex?s Engineering Co. 0 106.2 Wildcat Services 0 106.3 Easy Leasing 0 106.4 IFM Co. 3,140 106.5 Liu Corp. 0 106.6 Gomez Co. 2,728 106.7 Delta Co. 0 106.8 KC, Inc. 0 106.9 Dream, Inc. 0 119 Merchandise inventory 0 126 Computer supplies 760 128 Prepaid insurance 1,908 131 Prepaid rent 865 163 Office equipment 8,020 164 Accumulated depreciation?Office equipment $ 210 167 Computer equipment 20,900 168 Accumulated depreciation?Computer equipment 1,060 201 Accounts payable 1,130 210 Wages payable $ 900 236 Unearned computer services revenue 1,330 307 Common stock 68,000 318 Retained earnings 14,263 319 Dividends $ 0 403 Computer services revenue 0 413 Sales 0 414 Sales returns and allowances 0 415 Sales discounts 0 502 Cost of goods sold 0 612 Depreciation expense?Office equipment 0 613 Depreciation expense?Computer equipment 0 623 Wages expense 0 637 Insurance expense 0 640 Rent expense 0 652 Computer supplies expense 0 655 Advertising expense 0 676 Mileage expense 0 677 Miscellaneous expenses 0 684 Repairs expense?Computer 0In response to requests from customers, A. Lopez will begin selling computer software. The company will extend credit terms of 1/10, n/30, FOB shipping point, to all customers who purchase this merchandise. However, no cash discount is available on consulting fees. Additional accounts (Nos. 119, 413, 414, 415, and 502) are added to its general ledger to accommodate the company?s new merchandising activities. Also, Success Systems does not use reversing entries and, therefore, all revenue and expense accounts have zero beginning balances as of January 1, 2014. Its transactions for January through March follow:Jan. 4 The company paid cash to Lyn Addie for five days? work at the rate of $225 per day. Four of the five days relate to wages payable that were accrued in the prior year. 5 Adria Lopez invested an additional $24,700 cash in the company in exchange for more common stock. 7 The company purchased $5,900 of merchandise from Kansas Corp. with terms of 1/10, n/30, FOB shipping point, invoice dated January 7. 9 The company received $2,728 cash from Gomez Co. as full payment on its account. 11 The company completed a five-day project for Alex?s Engineering Co. and billed it $5,430, which is the total price of $6,760 less the advance payment of $1,330. 13 The company sold merchandise with a retail value of $4,100 and a cost of $3,520 to Liu Corp., invoice dated January 13. 15 The company paid $730 cash for freight charges on the merchandise purchased on January 7. 16 The company received $4,170 cash from Delta Co. for computer services provided. 17 The company paid Kansas Corp. for the invoice dated January 7, net of the discount. 20 Liu Corp. returned $700 of defective merchandise from its invoice dated January 13. The returned merchandise, which had a $230 cost, is discarded. (The policy of Success Systems is to leave the cost of defective products in cost of goods sold.) 22 The company received the balance due from Liu Corp., net of both the discount and the credit for the returned merchandise. 24 The company returned defective merchandise to Kansas Corp. and accepted a credit against future purchases. The defective merchandise invoice cost, net of the discount, was $486. 26 The company purchased $9,100 of merchandise from Kansas Corp. with terms of 1/10, n/30, FOB destination, invoice dated January 26. 26 The company sold merchandise with a $4,620 cost for $5,880 on credit to KC, Inc., invoice dated January 26. 29 The company received a $486 credit memorandum from Kansas Corp. concerning the merchandise returned on January 24. 31 The company paid cash to Lyn Addie for 10 days? work at $225 per day. Feb. 1 The company paid $2,595 cash to Hillside Mall for another three months? rent in advance. 3 The company paid Kansas Corp. for the balance due, net of the cash discount, less the $486 amount in the credit memorandum. 5 The company paid $590 cash to the local newspaper for an advertising insert in today?s paper. 11 The company received the balance due from Alex?s Engineering Co. for fees billed on January 11. 15 The company paid $4,750 cash for dividends. 23 The company sold merchandise with a $2,570 cost for $3,260 on credit to Delta Co., invoice dated February 23. 26 The company paid cash to Lyn Addie for eight days? work at $225 per day. 27 The company reimbursed Adria Lopez for business automobile mileage (900 miles at $0.20 per mile). Mar. 8 The company purchased $2,860 of computer supplies from Harris Office Products on credit, invoice dated March 8. 9 The company received the balance due from Delta Co. for merchandise sold on February 23. 11 The company paid $780 cash for minor repairs to the company?s computer. 16 The company received $5,330 cash from Dream, Inc., for computing services provided. 19 The company paid the full amount due to Harris Office Products, consisting of amounts created on December 15 (of $1,130) and March 8. 24 The company billed Easy Leasing for $9,157 of computing services provided. 25 The company sold merchandise with a $2,102 cost for $2,920 on credit to Wildcat Services, invoice dated March 25. 30 The company sold merchandise with a $1,168 cost for $2,240 on credit to IFM Company, invoice dated March 30. 31 The company reimbursed Adria Lopez for business automobile mileage (1,200 miles at $0.20 per mile).The following additional facts are available for preparing adjustments on March 31 prior to financial statement preparation:a. The March 31 amount of computer supplies still available totals $2,015. b. Three more months have expired since the company purchased its annual insurance policy at a $2,544 cost for 12 months of coverage. c. Lyn Addie has not been paid for seven days of work at the rate of $225 per day. d. Three months have passed since any prepaid rent has been transferred to expense. The monthly rent expense is $865. e. Depreciation on the computer equipment for January 1 through March 31 is $1,060. f. Depreciation on the office equipment for January 1 through March 31 is $210. g. The March 31 amount of merchandise inventory still available totals $664.Prepare journal entries to record each of the January through March transactions. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)Post the journal entries in part 1 to the accounts in the company?s general ledger. (Note: Begin with the ledger?s post-closing adjusted balances as of December 31, 2013.) (Record the transactions in the order presented. Do not skip rows.)Prepare a partial work sheet consisting of the first six columns that includes the unadjusted trial balance, the March 31 adjustments (a) through (g), and the adjusted trial balance.Prepare an income statement (from the adjusted trial balance in part 3) for the three months ended March 31, 2014. Use a single-step format. List all expenses without differentiating between selling expenses and general and administrative expenses.Prepare a statement of retained earnings (from the adjusted trial balance in part 3) for the three months ended March 31, 2014.Prepare a classified balance sheet (from the adjusted trial balance) as of March 31, 2014.

Paper#39856 | Written in 18-Jul-2015

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